Catastrophe modeller Eqecat has defended its loss estimate for the June 13 Christchurch earthquakes, while reinsurers have reassured the market they will cover New Zealand risks.

Eqecat is standing by its forecast that the most recent severe quakes will cause insured losses of $US3-$US5 billion ($2.8-$4.7 billion), despite New Zealand Prime Minister John Key saying it has over-estimated the cost and Insurance Council of New Zealand (ICNZ) CEO Chris Ryan agreeing it is too high.

Other industry figures say the damage is likely to be in the millions rather than billions because so much damage was already incurred in the earlier earthquakes.

Some areas of Christchurch will be abandoned because the land is beyond repair, and New Zealanders have expressed concerned about their ability to get insurance in future. ICNZ has warned that the quakes may lead to “a questioning of the level of insurability for earthquakes that New Zealand receives”.

Mr Ryan says the continuing aftershocks “are being viewed with increasing concern by reinsurers and international insurers”.

“The aftershocks raise the level of risk seen in New Zealand, and may have a significant impact on insurance and reinsurance policies in the future,” he said.

He has previously warned New Zealanders to expect higher premiums and excesses, and both have begun to move.

Swiss Re Chief Property Underwriter for Asia Mike Mitchell says the quakes have put pressure on reinsurance pricing in the country, both from modelling and an increased margin expectation.

But he says Swiss Re “remains wholly committed to continuing to provide capacity to the New Zealand market and maintaining our strong relationships with clients”.

The series of earthquakes has also called for a reworking of catastrophe models. Mr Mitchell says shortcomings have been uncovered in most, if not all, of the loss models that reinsurers use to price business.

“Liquefaction in Christchurch was much greater than catered for in the modelling, and modelling error seems to have arisen in the areas of construction quality, business interruption and the interaction between private insurance and the Earthquake Commission,” he said.

Eqecat made its calculation only a few hours after June 13’s 6.3 quake. It earlier estimated the 7.1 September quake as causing insured losses of $US4-$US6 billion ($3.7-$5.6 billion) and February’s event, which was closer to central Christchurch, incurring losses of $US8-$US12 billion ($7.4-$11.3 billion).

Following the criticism of its latest forecast Eqecat issued a statement on Friday in response to insuranceNEWS.com.au questions saying the incremental losses from the June 13 event imply an expectation of a 10-20% increase in damage from the February earthquake.

It says its modelling has factored in the damage to buildings that had already been weakened by previous quakes. The 6.3 earthquake on June 13 would be expected to cause about 10%, or $US1.5 billion ($1.15 billion), more damage than the 6.1 in February, which it estimates caused $US15 billion ($14.15 billion) of damage.

Noting that buildings are in various states of repair, Eqecat says it would expect those that were repaired have been damaged again.

It says infrastructure will also have been affected again, and buildings partially demolished or repaired will be more vulnerable if structural elements such as walls are damaged or removed. There will also have been more ground failure.